tv [untitled] July 28, 2011 10:00pm-10:30pm EDT
good evening and welcome to the alona show where you'll get the real headlines and none of the mersey we're coming live out of washington d.c. i'm lauren lyster in for alona now the debt debate is bringing us one day closer to default the u.s. may lose its aaa credit rating and everyone of course is worried but these ratings agencies were so worried about how the shoddy track record to begin with joe weisenthal from the business of business insiders going to be here to talk about
that and don't forget at the same time folks we are still out war a few of them actually at a price we cannot separate from our fiscal crisis any longer yet it is all being overshadowed by money talk we will tell you all the details you need to know about afghanistan pakistan and other places where the u.s. is dropping bombs still plus senators may be sneakily in talks to renew a law that lets by agencies track your location at any time with no oversight we'll have all of that and more on tonight's show but first what did the mainstream media . all right as the fall continues to threaten the country the mainstream media took a break from their coverage of that to report on the horrible fate that has bee fallen a popular game show host take a look. game show host alex alex through back found himself in serious jeopardy
when police say an intruder broke into his san francisco hotel room to state evening jeopardy game show host alex are back toward his achilles tendon chasing down a burglar. looking. we'll have surgery to morrow and be the canvas for six weeks. ok we all love jeopardy i have to admit that i do the low show staff to we are all huge bands we even play it live at times and we feel real real sorry for alex track that he has gotten rob has hurt his ankle it's horrible but does this really mean there are reports on all the mainstream networks live hits with reporters for the very latest on his tendons seriously i look at the ticker at the bottom of one of those reports had the suicide bombing in iraq well they're devoting the spotlight to back anyway as the debt stalemate continues and doom and gloom continues to be debated we think
an important part of that story is being largely overlooked the us is aaa credit rating what happens if the u.s. loses it everyone is worried about the three ratings agencies that are threatening to downgrade the u.s. debt and what that means the calamitous chain of events that could lead to some analysts say that a downgrade is inevitable at this point even if the debt ceiling is raised eventually some like investor jim rogers who i've interviewed many times he thinks the markets already accepted that the u.s. is downgraded but what about the track record of these very ratings agencies that everyone is so concerned about let's talk about japan it's a great example standard and poor's downgraded their rating not one not two but the re times about a decade ago between two thousand and one and two thousand and two and what happened in the markets freak out no the market did not free. government borrowing costs did not soar and back there was actually a steep decline in borrowing costs for the country now it's been
a decades and szczepan lost that aaa credit rating and its ten year yield is close to a whopping one percent and its currency has been taken down and it's actually at the strongest levels of the decade now the yield just as a refresher on government it's basically the interest rate that the government pays on its paws so if it's low which one percent sure is that suggested investors are willing to make very little money on that investment in order to hold that debt now ok japan that's one country what about others let's look at canada australia they've lost their aaa credit rating in the past they were only marginally impacted and they got their aaa credit rating back after a few years of some fiscal discipline now if backed it actually turns out that when you look at the history of all aaa downgrades by s. and p. yields have traditionally gone down afterwards not to mention there are other examples ratings agencies are blamed for missing the housing crisis the financial
crisis inquiry commission in fact reported back in january of two thousand and eleven that the three credit rating agencies were key enablers of the financial meltdown enablers the mortgage related securities at the heart of the crisis could not have been marketed and sold without their seal of approval that was a quote those were their findings the inquiry commission now in addition to all of those examples the u.s. dollar and u.s. debt have been considered safe havens in the past and as joe weisenthal who will speak to in a minute has pointed out on the business insider the truth is that there really isn't that much other aaa rated stuff for people to invest in so as everyone calls calamity on the loss of the u.s. is aaa credit rating not questioning the history of the ratings agencies who threaten to take down that score that is what the mainstream media is missing.
all right the debt deal made it continues in washington lawmakers are heading for another showdown tonight as if we haven't had enough republicans in the house are set to vote on the speaker's plan which of course the senate says that it won't pass now the republican republican plan has gone down to deficit cuts whittled down to just nine hundred billion dollars over ten years nine hundred billion pretty wimpy compared to the fourteen trillion dollar debt nonetheless the eleventh hour deal making or the lack of it continues the u.s. further towards this scary default deadline so now everyone's wondering if come tuesday washington hasn't gotten this figured out who's going to get paid conventional wisdom seems to think that it's investors first and on top of that predictions of bound over whether a downgrade to the u.s.
is aaa credit rating is coming on tuesday and how markets the world over will react to that well here to help us understand all of this is job wise and all he's deputy editor of the business insider and it's so nice to see you. thanks for having me yeah so first of all as i just pointed out minute ago and as you pointed out and you're writing the track record of these ratings agencies isn't exactly stellar do you think that means that if the u.s. gets downgraded it won't be armageddon. well you know i don't think it will be armageddon that's not to say there won't be issues there are the key thing is that there are investors who are compelled by regulations or rules that require them to hold aaa credit and that could become an issue if the u.s. lost that status and how they would never gave that. becomes a problem as you said earlier one thing going in the u.s. is favor is that there is a bet much other aaa rated credit out there of any volume so it's not like people
can just switch to something else it's pretty scarce so popular line of thinking is that if the u.s. were to lose its aaa rating that all those rules would be suspended or ignored but you know you don't really know how things are going to go in practice and you know until you get it you're not sure i guess what i would say is that this is a private cry over hyped. as a hold on the debt would be default on the debt would be a big crisis payment protos ation that forced the government to cause cut spending would hurt the economy even if we didn't default and then somewhere below that i would put the aaa rating is kind of it should be down there on people's concerns i think ok so what do you think wall street is concerned about most when you know their banks have come out warning obama and congress to reach a deal. very soon they say that this is very grave the danger is if that agreement isn't reached can they point out a number of things they need all the things that you just did what do you think that they're most concerned about and you know do they really think that this is
going to be such a bad situation or are they looking out for their own interests and talking their own books. i think it's a bit of both i think if there were they're worried that it could get to a situation in which maybe there is an actual default on coupon payments and that would be probably catastrophic it could easily start of banking crisis and unlike the last banking crisis that we saw in two thousand and eight there wouldn't be a federal government with the ability to bail it out so that is extremely scary but look we're just heading into financial uncharted territory here and bad scares everyone i think if you know him to very few individuals will say i expect a true default but the fact is they just don't know what's going to happen on august second or august third or whatever and no one wants to see that and while you might say that the wall street banks are just looking out for themselves there's just no separating the banking system from the overall economy ok speaking
of markets taking out people being scared how do you read what's been going on in the markets i know that's and p. five hundred fell for a fourth straight day in a row but you've also seen some complacency have also seen some predictions that stock markets are going to tank and then them not tank so what do you think investors i thinking. we're going the stock market the first i would say is that despite the following it's still pretty close to its highs of the year it's actually remarkable given how much has been thrown at this market in the form of a weak economy and this crisis of the situation in europe of the japan earthquake how well stocks have done i think is there's diddly no sign that stocks or anything else is really panicking yet they're starting to see it a little bit in the credit markets some nervousness but for the most part it's just what street has this view and everyone keeps saying it go they'll get it done in the end they always do maybe there will be a tarp type vote where there's like. they'll get it done i don't know i think maybe the market's been pretty behind the curve i think a lot of market participants don't understand how washington works they don't get
the dynamics they've been pretty flat footed on this pretty surprised that it's gotten this far so i would say part of the reason the market hasn't kind of maybe just because they don't realize how serious the dangers ok do you think that there is there is danger that lawmakers won't get this done someone that has an understanding about. yeah i do i would still say the most likely scenario is that they get something done but it is there's a lot of moving parts here and there's not a obvious or easy path from now to you know passage in the next few days i could spell out that you know people could spell out that a lot of this might happen and that they'll vote on this in the senate and the house but this is incredibly dynamic there's definitely no historical precedent for this do you think that i know you said that you think that maybe investors don't quite understand how washington works do you think that washington understands how the market works you think that lawmakers plan to vote on their plans tonight after the market closed on purpose. there is awareness of the markets are watching
last weekend for example you heard john boehner say they wanted to have a plan by the time the asian markets opened they didn't get a plan in but there's no question that especially the leadership is looking at the markets and you know certain the white house and the treasury or looking at the markets so there's awareness of it whether they really get what the markets are looking for i don't really know and i would say that outside the leadership the rank and file especially of the tea party republicans there's up probably pretty big difference of the markets work i think can be got are usually has a pretty good eye on what wall street is like a market i think it was pretty concerned about what they're thinking but what about what economists are you thinking that say that the bigger threat to the u.s. is not you know the debt ceiling is not this debate right now that the bigger threat is the u.s. this debt problem that fourteen trillion dollars that that's so high and that reining it in is really what global investors want in order to assure the faith and
credit of the u.s. to lawmakers had anything on the table that sends that message to the world i mean banners plan now with nine hundred billion bucks over a decade. you i don't know to be honest i think economists are pretty split on that yeah there are a lot of people warning about this as the u.s. dead but there are also a lot of economists warning about what spending cuts will do to the u.s. economy in the midst of a very weak recovery that's already faltering you look at china and you look at europe they're probably just as concerned about that because they're mean of the u.s. engine of demand really slows down over the next year to their economies. it is a mix of real quickly because i want to get in here because you mentioned that people that advocate for stimulus and spending some are coming out saying all of this debt talk shows that keynesian thinking is dead and that this debt debate has proven that do you think that's true yes or no. no i think kids figure is not very popular right now in washington but i don't think it's been debunked or anything
like that all right well we will have to see what areas already bunking which proved true as we had closer to this d.-day of the fall on tuesday see what happens i want to thank you so much for coming on the show it's nice to feel thank you as always and still ahead right here stick around that's when terror attack in norway has ignited a debate here in the u.s. we'll look at prison conditions in both countries in just a minute to compare and while everyone is focused on the debt ceiling debate we turn our attention to u.s. wars they are still raging overseas lou in a sense a foreign policy analyst at the cato institute joins us to talk about u.s. war policy in just a few minutes. you know sometimes you see a story and it seems. you think you understand it and then you glimpse something else here's some other part of it and realized everything you thought you knew you don't. charge as if it.
i think. either one is well. or never governor says they're very safe get ready to leave their freedom. all right anyone who's seen the pictures knows there's been an outcry from some groups over the way the norway bomber and shooter anders breivik may be in prison you see the alleged right wing extremist who killed seventy six people could end up at a seemingly pretty cushy prison called howden prison although we should know that he's held no that he's currently held in solitary confinement at
a different facility he's not there but as of now breivik is charged with terrorism related charges which carry a prison term of up to twenty one years behind bars if convicted but if he's charged with crimes against humanity he could get thirty years may seem low but most people are concerned about the place where he may end up headlines have been everything from the luck super super luck super max to world's poshest prison to if i ever get sent to jail i hope it's norway's held in prison and fox news of course spent time discussing the luxuries of this prison in detail the typical bedroom at the holden prison complete with a flat screen t.v. the prisoners have access to a state of the are japan where they can shoot hoops or do a little rock climbing and there's artwork sprinkled throughout the facility including this mural i'm not even showing you the prisons recording studio where inmates are were pursing the prisons first musical production. that's a bit of anxiety in that report i personally like the prisoner artwork but aside
from that the daily the new york daily news also expressed disgust over breivik possibly entering this facility in an article they wrote such as life in the halls in prison were doing hard time means doing without h.b.o. and where inmates don't fear their showers because every prisoner has a private bathroom ok back up wow so the new york daily is angry because breivik will fear for his safety when he showers because the threat of rape isn't always just around the corner when he bends down for so ok it's obvious that the united states and norway have very different opinions on how prisoners should be treated in norway all these elements like recording studios personal bathrooms personal trainers are considered crucial for the rehabilitation process which is what norwegian officials consider the incarceration process and it's clear of course that the united states has taken a different approach overcrowding is rampant medical care is poor and the
prevalence of gang violence is on the rise within prisons but let's take a look at some of the hard facts here some statistics from time magazine ok when norwegian prisoners are released from jail only twenty percent of inmates return within the course of two years however the us has a much higher rate of return with the numbers hovering around fifty to sixty percent not to mention the difference in each country's prison roll norway has about sixty nine thousand inmates per one hundred thousand people the u.s. it has seven hundred fifty three per one hundred thousand people. now that is a big difference so is this proof that norway's rehabilitation approach for prisoners is actually working i'll let you decide for yourself but i want to go back to the media coverage i want to be clear i do not think that any man who has massacred innocent people should go unpunished i think that breivik should base the most serious repercussions for what he has done if convicted but for the new york
daily to be disappointed that the norway bomber will not be raped in prison that should maybe raise eyebrows i understand that people are in pain and morning after the horrific tragedy and oslo but this is to feed a little of the purpose of showing your humanity to mourn something like this when at the same time you're beginning to lose your own sense of it by suggesting a prisoner should be raped perhaps it's time for an ethics check here but i think it's safe to say that the daily crossed the line it's time. now as the debate eclipses all other battles do not forget that yes we are still out war the united states is still at war and those wars and us defense spending are incidentally costing a lot of money and they can't really be separated from the fiscal crisis the u.s. accounts for close to half of global spending on defense the wars have cost one point two trillion dollars since two thousand and one that is almost the size of
the country's deficit and something that bigger much higher brown university research project with the final bill at least three point seven trillion to four point four trillion yet u.s. troops are committed to afghanistan and till two thousand and fourteen some u.s. officials say many more years into the future maybe what's needed people are still dying just today more than twenty people including a b.b.c. reporter were killed in a suicide attack the taliban claimed responsibility for that one and in iraq this weekend the country's leaders are supposed to decide whether or not they'll ask u.s. troops to stay the on the december withdrawal deadline the u.s. of course is offering them and then there's u.s. involvement in libya along with covert operations that some equate to war in places like pakistan yemen and somalia so here to talk about all of this going on and what we really need to be focusing on is innocent she is foreign policy analyst at the cato institute thank you for being here soon think you know i know that this is something that you focus on when you travel to pakistan and you travel to afghanistan as well i'm curious how you read the violence that we've seen recently
against u.s. officials statements because today we have an attack by the taliban the u.n. put out numbers saying that violence and afghan casualties have increased in the first six months of this year to two very high levels to i think record highs or increase starkly and then this kind of seems to contradict what u.s. officials have said you have betrayed us before he went out saying that you know violence is on the decline and you had obama saying the taliban is broken is the situation getting better or worse there i think the problem than interestingly enough general petraeus or. they call these gains that we've seen in the past year or so a legit gains fragile and reversible and as we've seen over the past several months there's been a slow chipping away of the fragile and reversible security the u.s. and coalition forces have tried to bring about especially in the southern and eastern provinces i think a lot of the sort of targeted assassinations that we've seen over the past couple months whether that's ahmed wali karzai or the head of the kandahar police chief we
also saw the attack on the intercontinental hotel just recently i think all of these sort of bouts of violence shows how fragile the coalition government that we've supported for the past ten years really is and how it's an endless streams of foreign aid dollars to a fragile corrupt incompetent illegitimate regime both minutely will begin to unravel whether we remain in the country indefinitely or there we pull out tomorrow i think unfortunately we've seen the history of the country the ethnic and political fracture of the country it's beyond our wisdom it's beyond our patience and it's beyond our ability to sort of carry out this this humanitarian nation building or communitarian peerless mission i think you know i want to ask you because i think i interviewed you last about this probably more than a year ago and at that time you said this is a classic case of mission creep i think absolutely and since then you've seen more rhetoric about how there's no military solution and this needs to be a civilian and a diplomatic solution here and that's what we've seen many officials push for is the u.s. have they had it further and further in the wrong direction i think so i don't think we'll actually be leaving in twenty fourteen i hope so but unfortunately you
know we've seen president obama say that we'd be out of iraq within sixteen months and when he took office now he has gone officials trying to big the iraqi system there he said he'd be out of iraq now we're in libya so i mean even the promises of getting by twenty fourteen i think are highly unlikely especially when we look at the expansive role that the united states has taken in terms of building permit me throughout the country with dozens of a could be sold in iraq that's a question i have for you because you have one last time you visited after last may last may because there have been a lot of rumors permanent bases are planted. and as you've seen some senators talk about that do you know that there are plans for permanent bases have you seen permanent bases what they're calling it it's a little rhetorical trick to call it joint bases because the afghan security forces aren't competent enough to operate them independently earlies operate them and apparently coalition forces so beyond twenty fourteen it's likely that we're going to have u.s. and coalition forces in the training position or support mode for these quote joint pieces but in all intents and purposes it will actually allow the united states to
have a power projection presence in central asia in china and russia's backyard allowing of course the indians and pakistanis to sort of take root there all of course to the detriment of u.s. interests and continuing to valuation of our power of our resources and of our military strength why when wars are so expensive defense is so expensive and our country is in its debt crisis that lawmakers have been talking about nonstop for twenty four seven the last few weeks and months you hear of more people in washington saying this clearly you're not the only person that has this information you know i think some of my colleagues at the cato institute i think they're just cynical as me i think they would argue that there's a pervasive hold within the congress and within the executive branch of the military industrial complex unfortunately there are many people within the within the beltway who profit off of war in this not necessarily security folks but also development folks we see whether it's come on it's whether it's louis berger we see these huge development construction companies that have you know the country is
innocent riddled with failed foreign aid projects there's tens of billions of dollars that are being spent but even though those dollars been wasted you know no policymakers in the see that we're going to stop and pull our forces under sort of stop our humanitarian mission because again this sort of gloss on to these choice to games and at the same time underneath those altruistic aims we see a lot of money being spent a lot of people being killed and at the same time you hear reports come out earlier this week you had reports of counterterrorism officials and leaders saying that al qaeda is on the brink of collapse that after osama bin laden's death after year. that is collapsing what do you do you believe that and if so why are more people questioning why then we're in afghanistan and al qaeda has been weakened well before. assassination or kill them even before we probably only zero nine is where we really saw his capabilities severely severely diminished whether that was in pakistan are never going to stand or in yemen and somalia and i think now we sort of seen the shift in focus to the horn of africa now that's sort of the
new i guess sort of the new mission that will allow the united states to sort of begin poor in its resources pour in the nation building. in the humanitarian peerless aspect and some purchasing i think a lot of people they want to stop short and not really voice their opinions because they don't want to seem to be unpatriotic but it's incredibly patriotic to be critical of expansive government power that is leading to the deaths of again innocent civilians and of course our men and women in uniform but if those are where the threats are shifting coming from does the united states need to shift its resources and protect the country from those threats we've made a kind of be much much menace much more menacing presence that really is it's not this existential threat against the united states can be dealt with through terrorism operations it does not need to require at least one hundred thousand foreign troops in these foreign countries and i think honestly i think the drones of course are a lesser of two evils compared to having hundreds of thousands of boots on the ground but at the same time i think drone operations enhanced the proclivity to
want to use an insert u.s. military power so there's also a cost to relying too much on counterterrorism as well but i think that that's again the lesser of two evils and just quickly with this weekend being a deadline where any iraq you know they're going to say whether they want troops to stay or not there's a december deadline do you think that it even matters i mean are u.s. troops just going to stay there anyway or there's a mercenary army they're going to protect the state department. i'm happy brought that up in fact i think a lot of people who have been critical about the war just in the last several months have been bringing up the economic argument but. we're going to be scaling down somewhat in the next you know several months at least until next year but we'll still be having twice the number of troops compared to when obama took office by the end of that by next year around the campaign season which is convenient of course were for president obama but realistically we're not going to be decreasing the amount of money that we're being imported i mean just in fact a pentagon official just recently was quoted as saying that we spent twenty billion
dollars a year on air conditioning alone in afghanistan in iraq for the troops i mean so these are these are costs that are either ignored or the people who are because of again these games that people continue to invoke when you look beneath the surface surface maybe to reading about what's really happening on the ground no one really support what we're doing there wow well i want to thank you for giving us your insight because you spent time there and your research and you have a great perspective thanks for being on the show now still to come here tonight our thursday edition of showing tell us what everyone is focused on the debt ceiling talks there is actually a debate in d.c. right now over another law that strips away more of your civil liberties we'll talk about the fights and then just. into the only. google we're keeping just a short time ago but. i have every right to know what my government should do if you want to know why i think tax.